|
PureBytes Links
Trading Reference Links
|
Bill Coward writes:
> I can't vouch for the accuracy of this indicator, but I will pass
> along the formula. The following two pieces of data need to be
> tracked in two columns for five consecutive days (six days for A):
>
> Col A -- Current daily NYSE composite closing price
> Col B -- Number of daily new lows on the NYSE
Bill,
I assume you mean minus for these:
> For each of the last five days, a +1 or –1 is assigned to each value
..........................................^
> in Col A and Col B. The Col A value is determined by comparing the
> value for that date to the value for the previous date. If the
> current date close is greater than the previous date close, assign
> +1. If less than the previous date close, assign –1. Tally up the
...................................................^
> score for Col A (between –5 and +5).
..................................^
>
> The Col B value is determined by assigning a –1 to each day that the
> number of new lows exceeds 74; else assign +1. Tally up the score
.............................................^
> for Col B (between –5 and +5).
............................^
>
> Add the tallies for Cols A and B and you have your "Pitbull Crash Index,"
> or PCI.
>
> My copy of this formula is 2-3 years old and may have been refined by Ford
> during that period. The number 74 for new lows must have been "optimized"
> for all previous crashes. He actually says to use 74 if your data source
> is the Wall Street Journal, Dow Jones, or Barron's, and to use 40 if your
> data source is Investors' Business Daily. IBD must track fewer stocks on
> the NYSE than the other sources.
>
> Following are some of Ford's comments about the indicator:
>
> "The index runs from a –10 to a +10. A –10 is the most negative for
..................................^......^
> the market and we have always used it as an indicator to exit the
> market. At the other end of the extreme at +10, the market is
> unstoppable, at least in the short term.
>
> "If the index hits –10 at any time during the week (he recommends
.....................^
> checking it each weekend), exit the market the following Monday
> morning. Do not re-enter the market until the PCI hits a +6.
>
|